Run foreign currency revaluation processes
Fluctuations in exchange rates cause the theoretical value (book value) of open transactions in foreign currencies to vary over time. This unit provides information about the foreign currency revaluation process that you can run to update the value of open transactions in Accounts payable, Accounts receivable, and the General ledger.
Currency revaluation posting profiles
A currency revaluation posting profile lets you post a currency revaluation adjustment to different accounts per module (General ledger, Accounts payable, Accounts receivable, and Bank). For each module, you can post to a more granular level, where you can define a currency revaluation posting account per currency code and the lowest level of ledger account, vendor, customer, or bank. The differentiation can be for unrealized gain or loss for all modules. The realized gain or loss is available only for Accounts payable and Accounts receivable.
For more information about currency revaluation posting profiles, see Currency revaluation posting profiles
Foreign currency consideration for the General ledger
You can set up Accounts for currency revaluation from General ledger > Ledger setup > Ledger page, as shown in the following image.
Alternatively, you can set up accounts for currency revaluation for currency that is used instead of the accounts that are set on the Ledger page. Go to General ledger > Currencies > Currency revaluation accounts page to set up accounts for unrealized gain/loss for each legal entity.
After you have completed the setup, use the General ledger > Periodic tasks > Foreign currency revaluation page to revalue the balances of the main accounts. You can run the process in real time or schedule it to run by using a batch.
The Foreign currency revaluation page displays the history of each revaluation process, including when the process was run, what criteria was defined, a link to the voucher that was created for the revaluation, and a record if a previous revaluation was reversed. To run the revaluation process, select the Foreign currency revaluation button.
The From date and To date values define the date interval for calculating the foreign currency balance that is revalued. When you revalue profit and loss accounts, the sum of all transactions that occur within the date interval are revalued. When you revalue balance sheet accounts, the From date is ignored. Instead, the balance to be revalued is determined by going from the beginning of the fiscal year until the To date.
The Date of rate can be used to define the date for which the exchange rate should default. For example, you can revalue the balances between the date range of January 1 to January 31 but use the exchange rate that is defined for February 1.
Select which main accounts to revalue: All, Balance sheet, or Profit and loss. Only main accounts that are selected for revaluation (on the Main account page) is revalued. If you want to further restrict the range of main accounts, use the Records to include tab to define a range of main accounts or individual main accounts.
The revaluation process can be run for one or more legal entities. The lookup displays only the legal entities to which you have access. Select the legal entities that you want to run the revaluation process for.
Revaluation can be run for one or more foreign currencies. The lookup includes all currencies that were posted within the date range that is relevant for the type of main account (Balance sheet or Profit and loss) for the legal entities that are selected to revalue. The accounting currency is included in the list, but nothing is revalued if the accounting currency is selected.
Set the Preview before posting field to Yes if you want to review the result of the General ledger revaluation.
The preview in General ledger is different from the simulation in the Accounts receivable and Accounts payable foreign currency revaluation. The simulation in Accounts receivable and Accounts payable is a report. However, General ledger has a preview that you can post without having to run the revaluation process again.
The results of the preview can be exported to Microsoft Excel to retain the history of how the amounts were calculated. You cannot use batch processing if you want to preview the results of the revaluation. From the preview, you can post the results of all legal entities by using the Post button. If an issue occurs with the results for a legal entity, you can post a subset of the legal entities by using the Select legal entities to post button.
After the foreign currency revaluation process is complete, a record is created to track the history of each run. A separate record is created for each legal entity and posting layer.
Foreign currency revaluation for Accounts payable and Accounts receivable
To update the value of open transactions in Accounts payable and Accounts receivable, run the foreign currency revaluation process.
The process uses a new exchange rate to revalue the open amounts, or not settled amounts, on a specified date. The differences between the original posted amounts and the revalued amounts cause an unrealized gain or loss for each open transaction. The Accounts payable and Accounts receivable subledgers are then updated to reflect the unrealized gain or loss, and an accounting entry is posted to General ledger.
Use the Accounts payable > Periodic tasks > Foreign currency revaluation page and the Accounts receivable > Periodic tasks > Foreign currency revaluation page to revalue open transactions.
You can run the process in real time or schedule it to run by using a batch. The Accounts payable and Account receivable Foreign currency revaluation job is split into batches according to the number of open transactions.
When you define the settings for the revaluation process, be sure to verify whether you want to print a report of the results or not. The revaluation report can't be reprinted after the process is completed.
If you generate the foreign currency revaluation report, it shows various balances at the customer/vendor level and the currency level:
The balances of customers or vendors that have foreign currency transactions that have been revalued. The following balances are shown:
The total original balance in the foreign currency
The total foreign currency amount in the accounting currency, as of the previous revaluation
The total foreign currency amount in the accounting currency, as of the current revaluation
The difference between the previous and current revaluation. This difference is the additional unrealized gain or loss.
The total unrealized gain or loss for each currency.
A record is kept each time that you run a foreign currency revaluation.
From the record on the Foreign currency valuation page, select Transactions to view the detailed list of transactions that were created because of the revaluation. Each voucher transaction represents the open transaction that was revalued. If an open transaction was revalued more than once, you see two records that use the same voucher. One record is for the reversal of the previous unrealized gain or loss, and the other record is for the new unrealized gain or loss.
Accounts payable > Periodic tasks > Foreign currency revaluation
To run the revaluation process, select the Foreign currency revaluation button. Define appropriate settings for the following parameters:
Method - The method that is used in the selected foreign currency revaluation job:
Standard - Foreign currency revaluation jobs are posted, regardless of whether the result is a profit or a loss.
Minimum - Foreign currency revaluation jobs are posted only if the result is a loss.
Invoice date - Foreign currency revaluation jobs use the original exchange rate of the transactions, which are revalued to their original value in the accounting currency. The effect of any prior foreign currency revaluation is canceled.
Considered date - The date when all transactions that have open (not settled) amounts on that date are found. Foreign currency amounts are revalued by using the exchange rates that are entered on the Currency exchange rates page for the considered date. When foreign currency amounts are revalued on a considered date, this date becomes the last foreign currency revaluation date for the transactions that are adjusted. If you run foreign currency revaluation for a considered date that is earlier than the last foreign currency revaluation date on transactions that have already been adjusted, the periodic job doesn't adjust transactions that are open on the earlier considered date but that have a more recent last foreign currency revaluation date.
Date of rate - The date that determines the exchange rate that is used in the foreign currency revaluation.
Use posting profile from - The posting profile that is used to enter the default main account for Accounts receivable or Accounts payable for the accounting entries of the foreign currency revaluation transactions:
Posting - The posting profile of the customer transaction is used.
Select - Enter the posting profile in the Posting profile field.
Posting profile - If Select is selected in the Use posting profile from field, the posting profile that you enter in this field determines the posting profile of the foreign currency revaluation transactions.
Financial dimensions - The financial dimensions that are posted on the accounting entries of the foreign currency revaluation transactions:
None - No financial dimensions are posted. If you have a required financial dimension in your account structure, the revaluation process is still run and creates accounting entries that have no financial dimensions. You receive a warning message first so that you can cancel the revaluation.
Table - The financial dimensions of the customer account or vendor account are posted on the foreign currency revaluation transactions.
Posting - The financial dimensions of the transaction that is being revalued are posted on the foreign currency revaluation transactions. By default, the financial dimensions from the original transaction's Accounts receivable or Accounts payable ledger account is used for the revaluation transaction's Accounts receivable or Accounts payable main account, and the financial dimensions from the original transaction's expense/asset/revenue ledger account is used for the revaluation transaction's unrealized gain/loss main account.
For more information about Foreign currency revaluation for Accounts payable and Accounts receivable, see Currency revaluation for Accounts payable and Accounts receivable
Use foreign bank currency revaluation enhancements
Instead of having to consider every financial dimension when calculating gain or loss, your organization can select all financial dimensions or none when calculating gain or loss. By using this enhancement, your organization is calculating the balance of a bank account when considering all financial dimensions or none. Then the unrealized gain or loss is calculated per ledger account.
To enable this feature, go to the Feature management workspace and select Enhancements to bank foreign currency revaluation.
When the feature is enabled, go to Cash and bank management > Periodic tasks > Foreign currency revaluation. Select Foreign currency revaluation in the Action Pane and in put the necessary information to run your revaluation.